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Sound Medical Consulting, LLC OR/WA MGMA 2015
Lisa Marsh
1
Overview
RVU & WRVU Basics Payer Methodologies and Contracting
Strategies Practice Fee Schedules Benchmarking/Dashboard Basics Budgeting for the Medical Practice Elements of Physician Compensation Regulatory & Compliance Overview
2
3
RBRVS Resource Based Relative Value Unit
Basis of the Physician Fee Schedule (PFS)
which applies to the professional services of eligible providers
Conversion Factor Application SGR – Repealed on April 1, 2015, now increase
of .05% for 5 years GPCI Payment reductions – sequester, PQRS, VBPM
4
RVU Components
WRVU – Work RVU
PE RVU – Practice Expense RVU
MRVU – Malpractice RVU
5
CMS Payment Methodologies
PFS Payment = [(RVU work × GPCI work) + (RVU PE × GPCI PE) + (RVU MP × GPCI MP)] × CF.
Other CMS Payment Methodologies Medications – Average Sales Price Laboratory Ambulatory Surgery Fee Schedule Hospital Outpatient Department DME Schedule
6
RVU Basics
Origination – Harvard School of Business in 1985; signed into law in 1989
RBRVS payment system implemented in January 1992
AMA (RUC) RVS Update Committee provided initial RBRVS recommendations
7
RVU Basics
RVU tables are continually updated for misvalued codes, new CPT codes, etc.
Every 5 years, the RVU table is comprehensively updated.
All changes to the RVU tables must not exceed $20M/yr.; changes beyond that magnitude result in: Transitional periods Reassigned RVU amounts
8
Work Relative Value Unit (WRVU)
Physician Work Effort Time to perform the service Technical skill and physical effort Mental effort and judgment Stress due to potential risk to the patient
2007 Transition – AMA successfully initiated significant increase in E/M services resulting in $30M increase Budget Neutrality Adjuster 4 year transition
9
Work Relative Value Unit Until 2007 Consistent Widely used to track Productivity Common Metric to track Payer Mix shifts
Often used in Compensation Plans
Employed Practitioner Plans Uses in Independent Practitioner plans Provides Revenue Neutral Methodology for
risk sharing
10
Practice Expense RVU Site of Service 2002
Facility Components ○ Appointment scheduling, billing and collection
costs
Non-facility ○ Clinical and non-clinical labor, medical supplies &
equipment, billing & reception costs, legal and accounting, rent, utilities, etc.
○ Resulted in significant decreases to
Gastroenterology, Urology, Emergency Medicine
11
Practice Expense RVU
Several changes in methodology Full resource allocation in 2002
PE/HR – AMA Practice Expense per hour ○ AMA Socioeconomic Monitoring ○ Clinical Practice Expert Panel ○ Phase in from 2007 – 2010 ○ Resulted in multiple changes to many surgical
specialties
12
Recent PE RVU Changes AMA Physician Practice Information Survey
(PPIS) began in 2007; ○ 3656 respondents, 51 specialties now primary
source to update PE/HR ○ Initiated in 2010 and phased in through 2013 ○ Encompassed utilization rates for equipment,
phased in over 3 years from 50% - 90%. ○ Significantly impacted services such as
echocardiograms, etc.
○ Resulted in significant changes to Cardiology, Radiation Oncology, etc. Sleep Medicine RVU’s to begin PPIS input in 2015
13
Malpractice RVU Accounts for approximately 4% of the
RVU total weight
Changed to resourced based in 2002
Last comprehensive change in 2004
Next major review of Malpractice RVU will be 2015
14
RVU Table Adoption by Payers
CMS publishes new table in November of each year for subsequent year adoption.
WA Medicaid and L&I adopts in July of the following year
Commercial payers can adopt as early as one year out.
15
RVU Annual Recommendations
High Volume Code Review Transitional vs. Fully implemented Pro-active Contract Negotiations Budget Adjustments
Fee Schedule Update 16
Important Links
2015 Final Rule http://www.cms.gov/Medicare/Medicare-
Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices-Items/CMS-1612-FC.htmlf
17
Important Links
Physician Fee Schedule Look Up http://www.cms.gov/Medicare/Medicare-Fee-
for-Service-Payment/PFSlookup/index.html
RVU Tables http://www.cms.gov/Medicare/Medicare-Fee-
for-Service-Payment/PhysicianFeeSched/PFS-Relative-Value-Files.html
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Important Links
Medicare Laboratory Fee Schedule http://www.cms.gov/Medicare/Medicare-Fee-
for-Service-Payment/ClinicalLabFeeSched/clinlab.html
Physician Average Sales Price http://www.cms.gov/Medicare/Medicare-Fee-
for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html?redirect=/mcrpartbdrugavgsalesprice
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Important Links
Ambulatory Surgery Fee Schedule http://www.cms.gov/Medicare/Medicare-Fee-
for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html
20
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Payer Methodologies Specified Year CMS RVU Table &
Conversion Factor
% of a Specified Medicare Year
Clarifying Language Site of Service GPCI Application Transitional or Fully Implemented
22
Payer Methodologies Payment Modifiers
53 Discontinued Services = 50%
54 Pre-Op Only – CPT specific payment files
55 Post-Op Only – CPT specific payment files
62 Co-surgeons 62.5%
66 Team Surgeons 33%
23
Payer Methodologies Payment Modifiers
80, 81, 82 Asst. at Surgery = 16%
AS Asst. at Surgery PA = 14%
50 Bilateral Surgery = 150%
51 Multiple Procedures = 50%
52 Reduced Services = 50%
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Multiple Procedure Reduction
Highest RVU Value 100%; second code same session 50%, third – fifth code 25%
Highest RVU Value 100%; second – fifth codes 50%
Highest RVU value 100%; second code 50%; third code 25%
25
Endoscopy Code Family Reduction
Endoscopy Code Family Example Step 1: Primary Code CPT code 45380: full fee schedule amount ($248.50) Step 2: Same Code Family Reduction Base procedure: CPT code 45378 (fee schedule amount = $206.84) CPT code 45381: fee schedule amount minus base scope ($235.81 - $206.84) = $28.97 Step 3: Total Allowable for Multiple Proc. Same Family Add adjusted amounts for CPT codes 45380 and 45381: $248.50 + $28.97 = $277.47
26
Payer Methodologies
Ancillary Services % of Medicare Laboratory Fee Schedule % of Average Sales Price Immunization reimbursement Radiology Applications ○ Additional Discounts ○ Separate conversion factors
27
Internal Contract Benchmarking
RVU Year Evaluation
Pull top volume codes for last 12 months (codes performed more than 30 times per year)
Pull last 5 years or contract designated years
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Internal Benchmarking RVU Tables
29
CPT Volumes 2009 2010 2011 2012 2013
99211 157 0.50 0.53 0.58 0.58 0.60
99212 450 1.03 1.08 1.22 1.25 1.29
99213 1250 1.72 1.82 2.03 2.07 2.14
99214 1867 2.57 2.73 3.01 3.06 3.14
99215 200 3.48 3.68 4.05 4.11 4.20
Weighted RVU Profile
Multiply the volumes by the RVU for each CPT code and for each of the 5 RVU tables
Sum the total and compare the most favorable RVU years
30
RVU Evaluation Weighted Evaluation Profile
31
CPT Volumes 2009 2010 2011 2012 2013
99211 157 78.50 83.21 91.06 91.06 94.20
99212 450 463.50 486.00 549.00 562.50 580.50
99213 1250 2,150.00 2,275.00 2,537.50 2,587.50 2,675.00
99214 1867 4,798.19 5,096.91 5,619.67 5,713.02 5,862.38
99215 200 696.00 736.00 810.00 822.00 840.00
Total 8,186.19 8,677.12 9,607.23 9,776.08 10,052.08
Weighted Payer Profiles Multiply individual Payer Conversion
Factors by the Designated RVU for each CPT code and Multiply that by volumes
CF * (volumes*RVU Value) Multiply Medicare Allowables by Volumes
Sum the Totals for each Payer and
Compare to Medicare
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Internal Benchmarks
CPT Volumes Payer A Payer B Payer C Medicare
RVU Year $54 $56 $52 2014 CF 2009 2010 2013 Current Year
99211 157 $ 4,239 $ 4,660 $ 4,898 $ 3,149.4
99212 450 $ 25,029 $ 27,216 $ 30,186 $ 19,665.0 99213 1250 $ 116,100 $ 127,400 $ 139,100 $ 91,350.0 99214 1867 $ 259,102 $ 285,427 $ 304,844 $ 201,318.6 99215 200 $ 37,584 $ 41,216 $ 43,680 $ 28,874.0
Total $ 442,054 $ 485,919 $ 522,708 $ 344,357.0 % of
Medicare 128% 141% 152% 100%
Ranking 3 2 1
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Contract Negotiations RVU Related Market Parity – Internal Benchmarking
Disproportionate Decrease
RVU Values Payment Policies on Local Coverage
Determinations
Market Adequacy and Peer Comparison
34
Contract Negotiations
Value Based Contracting
Patient Engagement Tools
PMPM for Care Coordination
% of Increase for Cost Savings or QM
ACO Risk Sharing Pools and Exclusivity
35
Contract Terms
Quality Reporting Beyond applicable reporting
Application of Other Manuals and Policies Exclusion Testing Payment Policies
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Contract Terms
Merger Language Termination and applicability
Term and Termination
Termination without cause tied to “initial term”
Active vs. Passive renewal Multiple year contract and inflationary
increases
37
Contract Terms
No Charge Master Increases During contract term
Payer Fee Schedule Changes Unilateral non-signatory changes Reduction for mid-level Multiple procedure policies LCD Policies
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Payer Contract Provisions Lessor of Language
Dual Fee Schedules for Medicare and
Commercial Payers
Private Pay Discounts
Change in Fee Schedule Provisions Acquisition General Updates
41
Fee Schedules/Charge Master
Market Value Approach
Purchased for Geographic Area
Provides Fee Schedule by Percentile
Not related to internal benchmarks
42
Fee Schedules/Charge Master
Internal Benchmarking Compares Charge Master to Allowables in
Market Place See Table
43
Internal Benchmarking
CPT Payer A Payer B Payer C Medicare
RVU Year $54 $56 $52
CF 2009 2010 2013 Current Year
99211 $ 27 $ 30 $ 30 $ 20
99212 $ 56 $ 60 $ 63 $ 44
99213 $ 93 $ 102 $ 106 $ 73
99214 $ 139 $ 153 $ 157 $ 108
99215 $ 188 $ 206 $ 211 $ 144
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Internal Benchmarking RVU Year Evaluation
Conversion Factor Evaluation
Determine Internal Conversion Factor
and multiply by RVU
MAX Formula to create internal RVU table to control year to year variability
45
Fee Schedules/Charge Master
Create Cost Based Benchmarks Current Expenses Physician Salaries at National Benchmarks for
Productivity & Benefits Compare Cost per RVU to Collections per RVU Account for non-negotiable contracts, determine
contract needs to break even Determine internal CF to allow for range of
collections
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Benchmarking Purpose Compare, understand & Interpret data
points into operationally actionable items
Keep it concise, yet relevant
Never look at just one benchmark
Use the benchmarks to engage - Physicians – Operations & Finance – Clinic Managers and Better Practice Performance
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Internal or External Benchmarks
Internal Benchmarks
Measures success or progress within the organization
Monthly results measured against internal baseline data
49
Internal or External Benchmarks
External Benchmarks Local, Regional or Nationally Published
Benchmarks such as MGMA
Compares your practice or practitioners to other physicians outside of the organization
50
Survey Data
MGMA Compensation Survey & Cost Survey
Data points are each individual questions
and are not directly correlated to each other
Significant number of data points available for multiple specialties
51
Survey Data
MGMA Best Practices Gold Book Data points within each benchmark profile
are correlated to best and less effective financial outcomes
Limited number of specialties and fewer data points
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Creating a Benchmark Profile
Determine Key Indicators Determine relevant specialty
benchmarks Pull MGMA or other Benchmark Data
25th, Median and 75th Percentile data points as appropriate for Profile
Pull Internal Data and aggregate according to “by Physician FTE” or by “Provider FTE” comparison
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Benchmark Profiles
Practice Relevancy to MGMA Data Collections per Physician WRVU per Physician Collections per WRVU Charges per Physician Medicare and Medicaid % per practice
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Benchmark Profiles Revenue Cycle & Productivity
Charges, Collections & Adjustments Collections per WRVU WRVU per Physician Days in AR Aged AR over 120 days Top 5 Non-contractual Write offs Top 5 Denial Reasons Self Pay collection % Net Collection %
55
Benchmark Profiles
Revenue Cycle Charges, Collections & Adjustments
○ Can be ideal for independent practices that do
not use WRVU
○ Can indicate changes in payer mix, volume & anticipated income for both independent and employed practices or poor revenue cycle performance
56
Benchmark Profiles
Revenue Cycle Collections per WRVU ○ Isolates changes in payer mix or case mix
WRVU per Physician ○ Isolates changes in volume
57
Benchmark Profiles Revenue Cycle
Days in AR ○ Overall Revenue Cycle Performance indicator;
actual issues could be clinical, coding or billing related – all are part of Revenue Cycle
Aged AR over 120 days ○ Determines most vulnerable Income – over 90
days is typically valued at 50% of anticipated income; over 120 at zero for budget “reserves”
58
Benchmark Profiles
Revenue Cycle Top 5 Non-contractual Write offs ○ Isolates reasons for claims that result in
preventable write offs & actionable operational or policy changes No referral No Preauthorization Not Medically necessary & no ABN Bundled Service Untimely Filing
59
Benchmark Profiles
Revenue Cycle Top 5 Denial Reasons
○ Isolates problems causing delays in billing &
actionable operational or policy changes Clinical issues Coding issues Billing issues
60
Benchmark Profiles Revenue Cycle
Self Pay collection % ○ Pulse check to see if Self Pay Collection policies
need improvement Copayment Collections Pre-Collections Policies Collection Policies
Net Collection %
○ Determines if Non-contractual Write offs are within industry standards for specialty & ownership
61
Benchmark Profiles
Case Mix – Internal Benchmarks New and Established Patients ○ Identifies panel limitations for primary care
○ Identifies total volumes
○ Identifies potential consultation decline for
specialists
62
Benchmark Profiles
Case Mix – Internal Benchmarks Volume by Service Type ○ Identify critical services New & Established Patients Well Visits Outpatient Procedures (specificity) Inpatient Procedures Infusion & new Infusion Other
63
Benchmark Profiles
Case Mix – Internal Benchmarks WRVU per Visit for E/M
○ For specialties with high volumes of E/M services even reasonable coders lose significant amounts to under coding for services
64
Visits Daily 3
Difference in one level of service $30
Days per Week 4
Weeks per year 46
Annual Collections Reduction $16,560
Benchmark Profiles Case Mix – Internal Benchmarks
WRVU per outpatient or inpatient procedure (if available) ○ Case mix for surgery can change with CPT
Updates or changes in case types or complexity resulting in significant reductions in collections
○ Classify major case types and monitor monthly if software has ability to pull this metric
○ Review Dashboard Example
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Inclusive Project
Engagement Practice Administrator/Manager ○ Should lead budget process
Practitioners ○ Understand the most about continued
volumes, changes in practice, future opportunities for procedures, etc.
68
Inclusive Project
Coders Responsible for code changes, new bundled
items, changes in payable services
Billers ○ Coverage determinations which will result in
fewer or alternative services
69
Revenue Determine Total Volumes
E/M Services Inpatient Procedures Outpatient Procedures Collection Amount WRVU Amount
As a reality check, divide budgeted WRVU
by Budgeted collections to see if within realistic parameters
70
Revenue
Review Growth Trend Last 12 months Last 6 months
Justify with Budget Projections
71
Expenses Using volumes, determine anticipated
costs for: Staffing & Benefits Office & Medical Supplies Rent Physician Compensation & Benefits Other General Overhead A/R reserves Use categories for which there are external
benchmarks
72
Benchmark Success
Benchmark Budget vs. Actual Collections per WRVU Total WRVU Support Staff Salary & Benefits Office & Medical Supplies Rent Physician Compensation & Benefits Other General Overhead
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Benchmark Success
Understand how your budget and your actual performance measure up to External Benchmarks Perform external benchmark profile for
budget Perform external benchmark profile for
actual performance that year
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Conceptual Agreement Compensation plans should be a balance
of the following initiatives Operational Goals – what performance or
quality measures do you want to reward
Strategic Goals – emerging service lines, cross coverage, physician retention, etc.
Financial Goals – alignment of collections methodologies with compensation plans
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Security
Control Over Volumes
Monthly Cash Flow Needs
Balance with culture, sustainability, competitive salaries and overall productivity performance
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Production Incentives Creates compensation correlation to
current collection methodology
Balance with Security and Group Culture – some well established groups prefer 100% productivity
Keep in mind the change to value based reimbursement and the need to introduce new types of structures to align with future collection methodologies
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Strategic Initiatives Physician Retention
Competitive Salary Opportunity Eliminate Payer Mix Penalties Understand Culture and Strategic Initiatives
of the group
Service Line Development Need for cross coverage of specialists Consider individual physicians Determine capacity trend
79
New Hire & 3rd Year Practitioner
Initial hire considerations New to the area, often 1-2 years of salary
guarantee before moving to group model
Little or no prior experience ○ Reduced compensation, benchmarks
available for those with limited practice experience
80
New Hire & 3rd Year Practitioner
2nd or 3rd Year Practitioner Move to Group Compensation Plan ○ Model how plan will compensate employee
using the past 6-12 months data
○ Review Group Compensation Plan annually to be sure it is meeting your strategic, financial and operational goals.
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Competitive Sustainability & Fair Market Value Median Pay for Median Work Scalable but within Productivity to Salary
benchmark ratios Must be sustainable for independent
practices Must be within Fair Market Value for
Not-for Profit practices Sanctions Exclusion from Medicare
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Fair Market Value Fair Market Value must match
Compensation Benchmarks with WRVU Benchmarks for the same year
Common misunderstanding in Employed Models: Production per WRVU incentive is the same
RVU used to set the base –See Example Any WRVU table is acceptable with
compensation Fair Market Value is what someone is willing to
pay.
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Common Compensation Plans
Independent Practices Eat what you Kill – Collections Based
Collections pooling with redistribution through
production measure, eliminating payer mix casualties – RVU or % of Charges Based
100% equally shared expenses
Equally shared expenses for fixed overhead, variable overhead allocated by production measurement
84
Common Compensation Plans
Employed Practices Base Plus Production and/or Performance incentives
Model with True Up
100% Productivity ○ Trailing 3-12 months ○ % of historical Production with True Up
RVU Based Incentives ○ Must have modifier reductions ○ Must have true bundled service reductions
100% Salary Model
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Coding & Compliance Not new, but significant, ongoing financial
losses or exposure to fines and sanctions
Periodically Audit each practitioners coding; can benchmark against national bell curve for outliers – in house and outside Audits
Provide a structure for continual feedback to practitioners such as formal quarterly meetings with biller
Periodic formal third party education
87
HIPAA
Also not new, but continually monitored and sanctioned for violations. Multiple sources for compliance standards
○ MGMA HIPAA Security Risk Analysis Tool ○ Malpractice Carrier Tools
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OHSA/WISHA
Multiple tools and products available.
In Washington State, WISHA standards are enforceable and not exactly the same as OSHA, be sure to get a WISHA specific tool.
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SGR Repeal
End of the SGR inflationary penalty Provides a five year stability window of
.5% conversion factor increases First increase in July 2015 Second increase in January 2016
2020-2025 Fee Schedule rates will be maintained although adjustments through MIPS and APMs may be applied
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SGR Repeal
MACRA – Medicare Access and CHIP Reauthorization Act
Introduces MIPS – Merit Based Incentive
Payment System
Introduces APM – Alternative Payment models that will be exempt from MIPS
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SGR Repeal
Meaningful Use (MU), Physician Quality Reporting System (PQRS) and Value Based Payment Modifier (VBPM) sunset in 2018.
Merit Based Incentive Payment System (MIPS) goes into effect in 2019 Not yet defined but will be based on Quality,
Resource Use, EHR Meaningful Use and Clinical Practice Improvement Activities.
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Current Payment Adjustments
PQRS – Physician Quality Reporting System Can be claims based or attestation based
reporting.
Must participate to avoid 2% payment reduction in 2017 for all practices
2014/2016 was the final year for a bonus under PQRS.
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VBPM
VBPM – Value Based Payment Modifier High Cost , Low Quality reduction up to 2% -
in addition to the PQRS penalty
Low Cost, High Quality incentive up to 2% Bonus
Must have qualified in PQRS or other official CMS quality reporting metric program to be eligible for incentive
94
VBPM Timing
PQRS qualification in 2013 for 2015 VBPM: group practices with 100 or more eligible professionals (EPs)
PQRS qualification in 2014 for 2016 VBPM: group practices with 10 or more EPs
PQRS qualification in 2015 for VBPM in 2017: all Medicare FFS physicians
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VPBM Resources
MGMA The Value Based Payment Modifier: How to
Prepare your practice
PQRS/VBPM Survival Guide
Both have multiple links into CMS source documents and all qualified CMS reporting programs
96
Meaningful USE Two Meaningful Use stages in 2015 Stage
1- 18 criteria and Stage 2- 20 criteria.
Penalty for not meeting criteria in 2015 will be 3%, applied in 2017.
Proposed legislation to ease meaningful use criteria to be finalized later this summer.
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ICD 10 Delayed until October 2015
Education Anticipated concerns
○ Documentation of diagnosis in chart note, diagnosis selections vastly different
○ If converts education & documentation properly, no actual anticipated income losses
○ Potential short term cash flow disruptions as all systems convert – industry leaders say prepare for 90 days.
98
Current Bonus/Penalties
2014 (2016) PQRS 2%; MU 2%; VBPM 2%
2015 (2017) PQRS 2%; MU 3%; VBPM 4%
Sunset of current plans to MIPS
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New Bonus/Penalties
MIPS 2019 4% bonus/penalty
2020 5% bonus/penalty
2021 7% bonus/penalty
2022 and beyond 9% bonus/penalty
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MIPS Introduces bonuses as well as penalties
back into the formula Criteria not established yet, but will be
published in advance CMS will consult with specialty societies
before establishing criteria Special consideration will be given to rural
and small practices Annual improvements will be taken into
consideration
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Speaker Information Lisa Marsh Sound Medical Consulting, LLC Bellevue, WA Office: 425-406-8490 Cell: 360-790-1702 Email: [email protected]
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